Exhibit 10
CONFIDENTIAL
December 21, 2012
ShangPharma Holdings Limited
c/o Maples Corporate Services Limited
PO Box 309
Ugland House
Grand Cayman, KY1-1104
Cayman Islands
Ladies and Gentlemen:
Joint Benefit Group Limited (“Joint Benefit”) is pleased to offer this commitment with respect to the purchase of certain equity interests of ShangPharma Holdings Limited (“Holdings”). Holdings has been formed for purposes of acquiring ShangPharma Corporation (the “Company”) pursuant to an Agreement and Plan of Merger (as amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”), dated as of the date hereof, by and among the Company, Holdings, ShangPharma Parent Limited (“Parent”) and ShangPharma Merger Sub Limited (“Merger Sub”) on the terms and subject to the conditions set forth in the Merger Agreement (the “Transaction”). Each capitalized term used and not defined herein shall have the meaning ascribed thereto in the Merger Agreement. This agreement is being delivered together with the commitment letter, dated as of the date hereof, from TPG Star, L.P. and TPG Biotechnology Partners II, L.P. (together with TPG Star, L.P., collectively, the “TPG Funds”) to Holdings setting forth their respective commitments to purchase, on the terms and subject to the conditions set forth therein, certain equity interests of Holdings (the “TPG Commitment Letter”).
1.Commitment. Joint Benefit hereby commits to purchase, equity securities of Holdings at or prior to the Effective Time for an aggregate cash purchase price in immediately available funds equal to $3,000,000 (the “Commitment”), on the terms and subject to the conditions specified herein, which Commitment is to be used by Holdings and/or Parent solely for the purpose of funding a portion of the Exchange Fund required to be paid by Holdings and Parent to consummate the Transactions pursuant to and in accordance with the Merger Agreement and payment of a portion of the fees and expenses in connection with the Transaction and the Debt Financing or other transactions related thereto. In the event Holdings and/or Parent does not require an amount equal to the sum of the Commitment plus the amount of the aggregate commitment under the TPG Commitment Letter in order to consummate the Merger, then the Commitment and the aggregate commitment under the TPG Commitment Letter shall be reduced (i) collectively, to an amount that is sufficient, in combination with the other financing arrangements contemplated by the Merger Agreement, for Holdings, Parent and Merger Sub to consummate the transactions contemplated by the Merger Agreement and payment of all of the fees and expenses in connection with the transactions related thereto, and (ii) such that after giving effect to such reduction, the expected shareholding percentage in Holdings immediately following the Effective Time, on a fully diluted basis, of (x) Founder, ChemExplorer Investment Holdings Limited, ChemPartner Investment Holdings Limited and Joint Benefit Group Limited (collectively, the “Founder Shareholders”), on the one hand, and (y) TPG Star Charisma Limited and TPG Biotech II Charisma Limited (collectively, the “TPG Shareholders”) on the other hand shall be as set forth onAnnex 1. Notwithstanding the foregoing, no adjustment pursuant to this Section 1 shall result in a reduction of the aggregate commitment under the TPG Commitment Letter to be an amount that is less than $19,000,000. If the application of this Section 1 would result in the aggregate commitment under the TPG Commitment Letter to be less than $19,000,000, then such aggregate commitment under the TPG Commitment Letter shall not be reduced further and any remaining reduction shall be made from the Commitment on a dollar-for-dollar basis.
2.Conditions. Joint Benefit’s Commitment shall be subject to (i) the execution and delivery of the Merger Agreement by the Company, (ii) the satisfaction or waiver (to the extent permitted under applicable Law) at the Closing of each of the conditions to Holdings’, Parent’s and Merger Sub’s obligations to effect the Closing set forth in Section 7.1 and Section 7.2 of the Merger Agreement (other than any conditions that by their nature are to be satisfied at the Closing but subject to the prior or substantially concurrent satisfaction of such conditions), (iii) the Debt Financing (or any alternative financing that has been obtained in accordance with, and satisfies the conditions of, Section 6.12(b) of the Merger Agreement) having been funded in accordance with the terms thereof or will be funded in accordance with the terms thereof at the Closing if the Equity Financing is funded at the Closing, and (iv) the Closing occurring substantially simultaneously in accordance with the terms of the Merger Agreement.
3.Limited Guaranty. Concurrently with the execution and delivery of this Agreement, Joint Benefit is executing and delivering to the Company a limited guaranty related to certain of Holdings’, Parent’s and Merger Sub’s obligations under the Merger Agreement (the “Limited Guaranty”). The parties agree and acknowledge that the Company’s rights pursuant to clause (ii) of the first sentence of Section 5 hereof, the Company’s rights against Holdings, Parent and Merger Sub pursuant to the Merger Agreement and the Company’s right to assert any other Retained Claim (as defined in the Limited Guaranty) against the Non-Recourse Party(ies) (as defined in the Limited Guaranty) against which such Retained Claim may be asserted as set forth in Section 8 of the Limited Guaranty, shall be, and are intended to be, the sole and exclusive direct or indirect remedies available to the Company against Joint Benefit or any other Non-Recourse Party in respect of any liabilities or obligations arising under, or in connection with, the Merger Agreement or the transactions contemplated thereby or the negotiation thereof, including in the event Holdings, Parent or Merger Sub breaches its obligations under the Merger Agreement, whether or not such breach is caused by Joint Benefit’s breach of its obligations under this Agreement.
4.Parties in Interest; Third Party Beneficiaries. The parties hereto hereby agree that their respective agreements and obligations set forth herein are solely for the benefit of the other party hereto and its respective successors and permitted assigns, in accordance with and subject to the terms of this Agreement, and this Agreement is not intended to, and does not, confer upon any Person other than the parties hereto and their respective successors and permitted assigns any benefits, rights or remedies under or by reason of, or any rights to enforce or cause Holdings to enforce, the obligations set forth herein;provided, that the Company is an express third party beneficiary hereof and shall have the enforcement rights provided in Section 5 of this Agreement and no others. Nothing in this Agreement, express or implied, is intended to confer upon any Person other than Holdings, Joint Benefit and, to the extent provided in this Section 4, the Company, any rights or remedies under, or by reason of, this Agreement or to confer upon any Person any rights or remedies against any Person other than Joint Benefit under or by reason of this Agreement, except that any Non-Recourse Party may rely on and enforce the provisions of Section 3 hereof.
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5.Enforceability. This Agreement may only be enforced by (i) Holdings at the direction of Joint Benefit, or (ii) the Company pursuant to the Company’s right to seek specific performance of Parent’s obligation to enforce Joint Benefit’s obligation to fund its Commitment in accordance with the terms hereof, pursuant to, and subject to, and solely in accordance with, the terms and conditions of, Section 9.11 of the Merger Agreement and those set forth herein. No creditor of Holdings, Parent or Merger Sub (other than the Company to the extent provided herein) shall have any right to enforce this Agreement or to cause Holdings or any other Person to seek to enforce this Agreement against Joint Benefit.
6.No Modification; Entire Agreement. This Agreement may not be amended or otherwise modified without the prior written consent of Holdings, Joint Benefit and the Company. Together with the Merger Agreement and the Limited Guaranty, this Agreement constitutes the sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between Joint Benefit or any of its Affiliates, on the one hand, and Holdings or any of its Affiliates, on the other, with respect to the transactions contemplated hereby. Except as expressly permitted in Section 1 hereof, no transfer of any rights or obligations hereunder shall be permitted without the consent of Holdings and Joint Benefit;provided that Holdings may transfer its rights or obligations under this Agreement to Parent and/or Merger Sub. Any transfer in violation of the preceding sentence shall be null and void.
7.Governing Law; Jurisdiction; Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any choice of law or other conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Each of the parties hereto irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by any party or its affiliates against any other party or its affiliates shall be brought and determined in the courts of the State of New York sitting in the County of New York or the federal courts of the United States of America sitting in the Southern District of New York. Each of the parties hereby irrevocably submits to the jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the parties agrees not to commence or maintain any action, suit or proceeding relating thereto except in the courts described above, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in New York as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in New York as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper, or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
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8.Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
9.Counterparts. This Agreement may be executed in any number of counterparts (including by facsimile or by .pdf delivered via email), each such counterpart when executed being deemed to be an original instrument, and all such counterparts shall together constitute one and the same agreement.
10.Confidentiality. This Agreement shall be treated as confidential and is being provided to Holdings and the Company solely in connection with the Merger. This Agreement may not be used, circulated, quoted or otherwise referred to in any document by Holdings or the Company except with the prior written consent of Holdings in each instance;provided, that no such written consent is required for any disclosure of the existence of this Agreement to (i) the extent required by applicable Law, the applicable rules of any national securities exchange or in connection with any SEC filing relating to the Merger (provided, that Holdings or the Company, as applicable, will provide Joint Benefit an opportunity to review such required disclosure in advance of such public disclosure being made) or (ii) Holdings’ or the Company’s Affiliates and Representatives who need to know of the existence of this Agreement.
11.Termination. The obligation of Joint Benefit under or in connection with this Agreement will terminate automatically and immediately upon the earliest to occur of (a) the Closing (at which time all such obligations shall be discharged, but subject to the performance of such obligations), (b) the termination of the Merger Agreement pursuant to its terms (unless the Company shall have previously made a claim under clause (ii) of the first sentence of Section 5 hereof, in which case this Agreement shall terminate upon the final, non-appealable resolution of such action and satisfaction by Joint Benefit of any obligations finally determined or agreed to be owed by Joint Benefit, consistent with the terms hereof), (c) the Company, or any duly authorized Person claiming by, through or for the benefit of the Company, accepting all or any portion of the Parent Termination Fee pursuant to the Merger Agreement or accepting any payment from the Guarantor (as defined in the Limited Guaranty) under the Limited Guaranty in respect of such obligations, and (d) the Company or any of its Affiliates, or any Person claiming by, through or for the benefit of the Company, asserting a claim against any Non-Recourse Party under or in connection with the Merger Agreement other than the Company asserting any Retained Claim against Joint Benefit against which such Retained Claim may be asserted as set forth in Section 8 of the Limited Guaranty.
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12.No Assignment. The Commitment evidenced by this Agreement shall not be assignable, in whole or in part, by Holdings without Joint Benefit’s prior written consent, and the granting of such consent in a given instance shall be solely in the discretion of Joint Benefit and, if granted, shall not constitute a waiver of this requirement as to any subsequent assignment;provided that Holdings may assign the Commitment under this Agreement to Parent and/or Merger Sub. Any purported assignment of this Agreement or the Commitment in contravention of this Section 12 shall be void.
13.Representations and Warranties. Joint Benefit hereby represents and warrants with respect to itself to Holdings that (a) it is duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization, (b) it has all limited partnership, corporate or other organizational power and authority to execute, deliver and perform this Agreement, (c) the execution, delivery and performance of this Agreement by it has been duly and validly authorized and approved by all necessary limited partnership, corporate or other organizational action by it, (d) this Agreement has been duly and validly executed and delivered by it and constitutes a valid and legally binding obligation of it and (assuming due execution and delivery of this Agreement, the Merger Agreement, and the Limited Guaranty by all parties hereto and thereto), enforceable against it in accordance with the terms of this Agreement (subject to the effects of bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally, and general equitable principles (whether considered in a proceeding in equity or at law)), and (e) Joint Benefit has available funds in excess of the Commitment.
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| Sincerely, | ||
| JOINT BENEFIT GROUP LIMITED | ||
/s/ Wenjuan Xiao | ||
| Name: | ||
| Title: | ||
[SIGNATURE PAGETO JOINT BENEFIT EQUITY COMMITMENT LETTER]
| Agreed to and accepted: | ||||
| SHANGPHARMA HOLDINGS LIMITED | ||||
| By: | /s/ Michael Xin Hui | |||
| Name: | Michael Xin Hui | |||
| Title: | Director | |||
| By: | /s/ Ronald Cami | |||
| Name: | Ronald Cami | |||
| Title: | Director | |||
[SIGNATURE PAGETO JOINT BENEFIT EQUITY COMMITMENT LETTER]
ANNEX 1
Shareholders | Percentage | |||
Founder Shareholders | 69.14 | % | ||
TPG Shareholders | 30.17 | % | ||
[Annex 1 to the Joint Benefit Equity Commitment Letter]